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F I S C A L I M P A C T R E P O R T
SPONSOR Sanchez, M.
ORIGINAL DATE
LAST UPDATED
02/08/07
03/15/07 HB
SHORT TITLE THIRD PARTY LIABILITY CLAIM TIME LIMITS SB 411/aSPAC/aHJC
ANALYST Weber
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
NFI
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Human Services Department
Office of the Attorney General
SUMMARY
Synopsis of HJC Amendment
The House Judiciary Amendment makes the following changes.
1. On page 3, line 2, after "submitted", strike the remainder of the line.
2. On page 3, line 3, strike "that is submitted".
3. On page 3, line 7, after the first occurrence of "claim", insert "by the provider".
4. On page 3, line 15, strike the closing quotation mark.
5. On page 3, between lines 15 and 16, insert the following new subsection:
"D. Nothing in this section shall be construed to preclude the application of common law
principles in determining equitable reimbursement from any third-party source for New Mexico
or a health insurer, including self-insured plans, group health plans, service benefit plans,
managed care organizations, pharmacy benefit managers or other parties."".
The first 4 changes related to minor language clarifications.
The fifth change is an addition that indicates common law principles should still be considered in
settlement of the third party liability cases.
pg_0002
Senate Bill 411/aSPAC/aHJC – Page
2
Synopsis of SPAC Amendment
The amendment makes three minor changes of language and does not change the substance of
the bill.
Synopsis of Original Bill
Senate Bill 411 amends §27-2-23, NMSA 1978 to specify that it is the Income Support Division
of the Human Services Department (the “Division") that is the agency having the responsibility
to determine whether any third parties may be liable for all or any part of the medical costs of
injury, disease or disability to a person receiving Medicaid assistance, and recognizing that the
Division is entitled to any payment the Medicaid recipient would otherwise be entitled to receive
from the third party payor for the medical costs paid by the Division.
The Attorney General describes the changes are “significant".
The bill proposes new subsection “C" that constitutes a significant addition to existing law. This
subsection imposes a duty on all entities providing health insurance by statute, agreement, or
contract within the State to:
C(1) provide information to the Division, at its request, concerning health coverage
provided by that health insurer to any person receiving services paid by the Medicaid
program.
C(2) accept New Mexico’s right of recovery, and assignment to New Mexico of any
right, of an individual or entity to payment from the party for an item or service for which
payment has been made under the Medicaid program.
C(3) require the provider to respond to an inquiry from the State regarding payment of
any payment for health care (not limited to just Medicaid-related payments) made within
three years of the payment.
C(4) preserve legal defenses for the health insurer provider that New Mexico’s
subrogation claim was not timely or for failure to “present proper documentation at the
point-of-sale", if the Division makes its subrogation claim within three years from the
date of service, and commences a legal action to collect on the subrogation claim within
six years of the Division making a subrogation claim.
FISCAL IMPLICATIONS
There are no direct fiscal implications but the Human Services Department anticipates an
increase in third party claim recoveries but does not quantify the amount. In state fiscal year
2006, HSD collected $1.7 million related to third party liability of which most was collected
from tort recoveries. This legislation could mean more revenue to HSD because the timeline for
claim submission is being extended and the legislation also enables the Department to get
information from entities that currently are not forthcoming with such information.
SIGNIFICANT ISSUES
The Attorney General adds.
Section C(2) may be read to eliminate the ability of the health insurance provider to contest the
State’s right to those funds.
pg_0003
Senate Bill 411/aSPAC/aHJC – Page
3
The bill is silent with respect to the effect of any prior payment from the private pay health
insurer to the insured person on account of claims made by the Division, or if the provider would
be able to assert prior payment to the covered Medicaid recipient as a defense to a claim from the
Division.
The meaning of the phrase “present proper documentation at the point-of-sale" is unclear and
may be subject to various interpretations.
It might be appropriate to address matters regarding privacy rights of victims of domestic
violence otherwise protected under §59A-16B-6, NMSA 1978.
It might be appropriate to consider whether delay by an insurer in paying an insured is
reasonable for the purposes of §39-2-1, NMSA 1978 (imposing attorneys fees and costs upon a
finding that the insurer acted unreasonably in failing to pay a claim), if the insurer had reason to
believe the Division might make a subrogation claim.
It might be appropriate to address in this bill or another bill the consequences eliminating the
right of the health insurance provider to contest the States’ right to those funds. The Medical
Assistance Division’s (MAD) Medicaid Provider Agreement contains a provision for a fair
hearing for adverse actions taken against a provider. This could include actions such as denial
of submitted claims, demand for recoupment of overpayments, etc. A provider may attempt to
claim that this provision violates the Provider Agreement “right to fair hearing".
The Human Services Department notes this language is significant because the federal Deficit
Reduction Act (DRA) language specifies that states must enact such language into statute. Third
Party Liability cost avoidance and recoveries have become an important issue to the Centers for
Medicare and Medicaid Services (CMS). CMS has stated that failure for states to enact such
legislation could result in a loss of federal revenues to the states.
MW/mt